Market announcement

Title

2020 IV quarter and 12 months consolidated interim report (unaudited)

Message

Nordecon's  sales revenue increased by approximately 26% in 2020 compared to the
previous  year, and this is the largest turnover of the Nordecon Group ever. The
volume  growth was based  on contracts concluded  in record volumes in 2019. The
construction  market in 2020 was characterised  by significant volatility, where
the record first quarter followed a sharp fall in demand in the second and third
quarters and some recovery in the fourth quarter. The decrease in volumes exerts
significant  pressure on the  margin of main  contracting and competition in the
sector is very high.
The  profitability of the  Nordecon Group in  2020 was influenced in addition to
the  general pressure  on the  margins of  the main  business by the activity in
foreign  markets. Restrictions on the movement  of materials and labour affected
by  the COVID-19 pandemic extended the completion of the work carried out on the
Swedish  market, which had a  significant impact on the  decrease in the group's
gross  profits compared to 2019. On the  positive side, the profitability of the
Infrastructure segment has increased, where market volumes have remained stable,
and  the Group's asphalt  concrete production and  installation volumes exceeded
those of previous periods.
The  net  profit  of  the  Group  continues  to be influenced by the significant
weakening  of the Ukrainian hryvnia against  the euro and the resulting exchange
rate  loss. As a  significant positive event,  the result was  influenced by the
profit earned from the sale of holding in the related company Pigipada OÜ.
The  biggest influence in  the demand for  construction services continues to be
the  uncertainty regarding the future associated with the COVID-19 pandemic. The
volume  of public  investment remains  at the  level of 2020, but private sector
orders  continue to decline. Nordecon Group  had contracts for 216 million euros
at  the end of 2020, which is 5% lower  than last year, but gives confidence for
the forthcoming year.

Condensed consolidated interim statement of financial position

 EUR '000                                     31 December 2020 31 December 2019
-------------------------------------------------------------------------------
 ASSETS

 Current assets

 Cash and cash equivalents                              12,576            7,032

 Trade and other receivables                            50,029           37,563

 Prepayments                                             2,638            1,813

 Inventories                                            22,454           21,142

 Total current assets                                   87,697           67,550


 Non-current assets

 Investments in equity-accounted investees                   0            2,369

 Other investments                                          26               26

 Trade and other receivables                             8,654            8,435

 Investment property                                     5,639            5,530

 Property, plant and equipment                          18,053           19,002

 Intangible assets                                      14,966           14,736

 Total non-current assets                               47,338           50,098

 TOTAL ASSETS                                          135,035          117,648



 LIABILITIES

 Current liabilities

 Borrowings                                             18,508           11,058

 Trade payables                                         46,932           40,730

 Other payables                                         12,232            7,954

 Deferred income                                         7,738            6,391

 Provisions                                              1,059              716

 Total current liabilities                              86,469           66,849


 Non-current liabilities

 Borrowings                                              7,353           16,326

 Trade payables                                             98               98

 Other payables                                          2,233              177

 Provisions                                              1,647            1,425

 Total non-current liabilities                          11,331           18,026

 TOTAL LIABILITIES                                      97,800           84,875



 EQUITY

 Share capital                                          14,379           14,379

 Own (treasury) shares                                    -660             -660

 Share premium                                             635              635

 Statutory capital reserve                               2,554            2,554

 Translation reserve                                     2,423            1,169

 Retained earnings                                      14,543           12,383

 Total equity attributable to owners of the
 parent                                                 33,874           30,460

 Non-controlling interests                               3,361            2,313

 TOTAL EQUITY                                           37,235           32,773

 TOTAL LIABILITIES AND EQUITY                          135,035          117,648

Condensed consolidated interim statement of comprehensive income


 EUR '000                                     Q4 2020 12M 2020 Q4 2019 12M 2019
-------------------------------------------------------------------------------
 Revenue                                       78,418  296,082  61,271  234,071

 Cost of sales                                -76,937 -285,086 -57,229 -222,302

 Gross profit                                   1,481   10,996   4,042   11,769



 Marketing and distribution expenses             -142     -528    -149     -784

 Administrative expenses                       -1,761   -7,073  -2,169   -6,837

 Other operating income                           180      453     187      315

 Other operating expenses                        -135     -273    -145     -193

 Operating profit                                -377    3,575   1,766    4,270



 Finance income                                 2,725    2,995      62    1,277

 Finance costs                                   -576   -2,678    -213   -1,219

 Net finance income                             2,149      317     151       58



 Share of profit/loss of equity-accounted
 investees                                       -232      734     -37      585



 Profit before income tax                       1,540    4,626   1,578    4,913

 Income tax expense                              -426     -508    -324     -764

 Profit for the period                          1,114    4,118   1,254    4,149



 Other comprehensive income:
 Items that may be reclassified
 subsequently to profit or loss

 Exchange differences on translating
 foreign operations                              -121    1,254     -42     -823

 Total other comprehensive income/expense        -121    1,254     -42     -823

 TOTAL COMPREHENSIVE INCOME                       993    5,372   1,212    3,326



 Profit attributable to:

 - Owners of the parent                         1,426    2,466     835    3,378

 - Non-controlling interests                     -312    1,652     419      771

 Profit for the period                          1,114    4,118   1,254    4,149



 Total comprehensive income attributable
 to:

 - Owners of the parent                         1,305    3,720     793    2,555

 - Non-controlling interests                     -312    1,652     419      771

 Total comprehensive income for the period        993    5,372   1,212    3,326



 Earnings per share attributable to owners
 of the parent:

 Basic earnings per share (EUR)                  0.05     0.08    0.03 0.11

 Diluted earnings per share (EUR)                0.05     0.08    0.03 0.11

Condensed consolidated interim statement of cash flows

  EUR '000                                               12M 2020   12M 2019
-----------------------------------------------------------------------------
  Cash flows from operating activities

  Cash receipts from customers                            345,967    277,941

  Cash paid to suppliers                                 -305,894   -239,901

  VAT paid                                                -9,9090     -6,816

  Cash paid to and for employees                          -27,409    -22,989

  Income tax paid                                            -291       -232

  Net cash from operating activities                        2,464      8,003



  Cash flows from investing activities

  Paid on acquisition of property, plant and equipment       -254       -594

  Acquisition of intangible assets                            -17          0

  Proceeds from sale of property, plant and equipment         332        377

  Cash received on acquisition of a subsidiary              3,605          0

  Proceeds from sale of an investment in an associate       3,596          0

  Loans provided                                              -17        -74

  Repayment of loans provided                                  44         13

  Dividends received                                          974        489

  Interest received                                            11          9

  Net cash from investing activities                        8,274        220



  Cash flows from financing activities

  Proceeds from loans received                              2,026      3,705

  Repayment of loans received                              -2,629     -4,032

  Lease payments made                                      -3,086     -3,276

  Interest paid                                              -936     -1,004

  Dividends paid                                             -472     -2,360

  Reduction of share capital                                    0     -1,892

  Other payments                                              -77         -4

  Net cash used in financing activities                    -5,174     -8,863



  Net cash flow                                             5,564       -638



  Cash and cash equivalents at beginning of period          7,032      7,678

  Effect of movements in foreign exchange rates               -20         -8

  Increase in cash and cash equivalents                     5,563       -638

  Cash and cash equivalents at end of period               12,576      7,032

Proposals for a dividend distribution and the reduction of share capital

Having  agreed it  with the  council, the  board proposes  that the shareholders
distribute  in 2021 a dividend of 0.06 euros  per share (1,892 thousand euros in
total)  for 2020. Own (treasury) shares do  not give the company any shareholder
rights.
In  addition, the Group's  ultimate controlling party  has notified the board of
its intention to propose at the annual general meeting a motion for reducing the
share  capital of Nordecon AS  by 972 thousand euros (0.03  euros per share). If
the  motion is approved, share capital  will decrease from 14,379 thousand euros
to 13,407 thousand euros. According to the motion, share capital will be reduced
by  reducing the book value of the shares  so that the number of the shares will
remain  the same,  i.e. 32,375,483 shares,  including the 846,898 own (treasury)
shares held at 31 December 2020.

Financial review

Financial performance

Nordecon ended the year 2020 with a gross profit of 10,996 thousand euros (2019:
11,769 thousand  euros).  Gross  margin  for  the financial year was 3.7% (2019:
5.0%). The  gross margin of the Infrastructure segment improved, rising to 5.1%
for  2020 and 6.1% for the fourth quarter (2019: 3.5%, Q4 2019: 1.9%). The gross
margin  of the Buildings segment,  on the other hand,  fell sharply, dropping to
3.6% for  2020 and 0.7% for the fourth  quarter (2019: 6.3%, Q4 2019: 8.8%). The
Infrastructure  segment's performance was  supported by an  earlier start of the
road  construction season and  a strong order  book. Even though market players'
capacity  to produce  asphalt concrete  continues to  exceed market  demand, the
Group's  asphalt concrete  output grew  year on  year, providing cover for fixed
costs,  the largest share of which is made  up of costs related to the plant and
equipment   required  for  asphalt  concrete  production  and  laying.  The  low
profitability of the Buildings segment, which had a strong impact on the Group's
results  for 2020, is attributable to some  unsuccessful projects in the Swedish
market. The weak performance of the Swedish market was largely due to the COVID-
19 pandemic  and its impacts on  the economic environment. Mobility restrictions
disrupted  the  Group's  management  of  its  Swedish  operations as well as the
movement  of the projects' subcontractors, which  were mostly from Estonia. This
delayed  the  performance  of  the  projects  and  caused  the  Group additional
unbudgeted site costs, which customers did not cover in full.
The  Group's  administrative  expenses  for  2020 totalled 7,073 thousand euros.
Compared to 2019, administrative expenses increased by around 3.5% (2019: 6,837
thousand  euros). The  rise is  attributable to  the fact  that Embach Ehitus OÜ
became  a subsidiary. The ratio of administrative expenses to revenue (12 months
rolling) was 2.4% (2019: 2.9%).
The Group's operating profit 2020 was 3,575 thousand euros (2019: 4,270 thousand
euros).  EBITDA amounted  to 7,003 thousand  euros and  EBITDA margin  was 2.4%
(2019: 7,311 thousand euros and 3.1%).
Finance  income for 2020 was influenced by the sale of the Group's investment in
the  associate  Pigipada  OÜ  at  the  end  of the year. Gain on the transaction
amounted  to 2,749 thousand euros. Finance income and expenses for the year were
also  strongly affected  by exchange  rate fluctuations  in the  Group's foreign
markets,  particularly  the  movements  in  the  exchange  rate of the Ukrainian
hryvnia, which weakened against the euro by around 24%. Translation of the loans
provided to the Group's Ukrainian subsidiaries in euros gave rise to an exchange
loss of 1,485 thousand euros in 2020 (2019: a gain of 1,044 thousand euros). The
Group's  total exchange loss  for the year  was 1,509 thousand euros (2019: 196
thousand  euros). The  movements in  foreign exchange  rates also  increased the
translation  reserve in  equity by  1,254 thousand euros  (2019: reduced by 823
thousand euros).
The  Group earned  a net  profit of  4,118 thousand euros  (2019: 4,149 thousand
euros). The profit attributable to owners of the parent, Nordecon AS, was 2,466
thousand euros (2019: 3,378 thousand euros).

Cash flows

Operating activities produced a net cash inflow of 2,464 thousand euros in 2020
(2019: an inflow of 8,003 thousand euros). The key factor that affects operating
cash flow is the mismatch between the settlement terms agreed with customers and
suppliers.  Operating cash flow is also strongly influenced by the fact that the
contracts  signed with most  public and private  sector customers do not require
them  to  make  advance  payments  while  the  Group  has to make prepayments to
subcontractors  and  materials  suppliers.  In  2020, the  share  of prepayments
increased  due  to  the  COVID-19 pandemic.  Cash  inflow  is  also  reduced  by
contractual retentions, which extend from 5 to 10% of the contract price and are
released at the end of the construction period only.
Investing  activities  resulted  in  a  net  cash inflow of 8,274 thousand euros
(2019:  an inflow of 220 thousand euros). Transactions with the strongest impact
were the transformation of Embach Ehitus OÜ from an associate into a subsidiary,
which  generated  cash  inflow  of  3,605 thousand  euros,  and  the sale of the
investment  in  the  associate  Pigipada  OÜ,  which  generated inflow of 3,596
thousand  euros. Investments in the acquisition of property, plant and equipment
and intangible assets totalled 271 thousand euros (2019: 594 thousand euros) and
proceeds from the sale of property, plant and equipment amounted to 332 thousand
euros  (2019: 377 thousand  euros). Dividends  received amounted to 974 thousand
euros (2019: 489 thousand euros).
Financing activities generated a net cash outflow of 5,174 thousand euros (2019:
an  outflow  of  8,863 thousand  euros).  The  largest items were loan and lease
payments. Proceeds from loans received totalled 2,026 thousand euros, comprising
the  use of overdrafts and development  loans (2019: 3,705 thousand euros). Loan
repayments   totalled   2,629 thousand   euros   (2019:  4,032 thousand  euros),
consisting  of regular repayments of long-term investment and development loans.
Lease  payments  totalled  3,086 thousand  euros  (2019:  3,276 thousand euros).
Dividends  paid  in  2020 amounted  to  472 thousand euros (2019: 2,360 thousand
euros).  Cash flows  of the  comparative period,  2019, were also  influenced by
payments  of 1,892 thousand euros made in connection with the reduction of share
capital.
The  Group's cash  and cash  equivalents totalled  12,576 thousand euros  at 31
December 2020 (31 December 2019: 7,032 thousand euros).

Key financial figures and ratios

 Figure/ratio                                        2020       2019       2018
-------------------------------------------------------------------------------
 Revenue (EUR '000)                               296,082    234,071    223,496

 Revenue change                                     26.5%       4.7%      -3.4%

 Net profit (EUR '000)                              4,118      4,149      3,821

 Net profit attributable to owners of the
 parent (EUR '000)                                  2,466      3,378      3,381

 Average number of shares                      31,528,585 31,528,585 31,528,585

 Earnings per share (EUR)                            0.08       0.11       0.11

 Administrative expenses to revenue                  2.4%       2.9%       3.0%

 EBITDA (EUR '000)                                  7,003      7,311      6,021

 EBITDA margin                                       2.4%       3.1%       2.7%

 Gross margin                                        3.7%       5.0%       4.5%

 Operating margin                                    1.2%       1.8%       1.8%

 Operating margin excluding gain on asset
 sales                                               1.1%       1.7%       1.3%

 Net margin                                          1.4%       1.8%       1.7%

 Return on invested capital                          9.3%      10.0%       8.4%

 Return on equity                                   11.8%      12.5%      11.2%

 Equity ratio                                       27.6%      27.9%      32.4%

 Return on assets                                    3.3%       3.7%       3.5%

 Gearing                                            21.1%      33.8%      28.5%

 Current ratio                                       1.01       1.01       1.12

 As at 31 December                                   2020       2019       2018
-------------------------------------------------------------------------------
 Order book (EUR '000)                            215,796    227,545    100,352
-------------------------------------------------------------------------------

Performance by geographical market

Revenue generated outside Estonia accounted for approximately 18% of the Group's
total revenue, which is the highest level for recent years'.

            2020   2019   2018
-------------------------------
  Estonia    82%    89%    93%

  Sweden     11%     5%     2%

  Finland     6%     4%     1%

  Ukraine     1%     2%     4%

Revenue  generated  in  Sweden  has  increased  year  on year, driven by two new
general  contracts for  the construction  of apartment  buildings and a concrete
works  subcontract for the construction of foundations for 73 turbines in a wind
farm   being   built  in  northern  Sweden,  all  signed  in  2019. The  revenue
contribution of the Finnish market has increased as well: a significant share of
it  resulted from contracts for the construction of the Raitinkartano commercial
and residential building and two farm complexes. The revenue contribution of the
Ukrainian market has decreased by about a half compared to 2019.
Geographical  diversification  of  the  revenue  base  is a consciously deployed
strategy  by which we mitigate the risks  resulting from excessive reliance on a
single  market. However,  conditions in  some of  our chosen foreign markets are
also  volatile and  affect our  current results.  Increasing the contribution of
foreign markets is one of Nordecon's strategic goals.

Performance by business line

Segment revenues

We  strive to  maintain the  revenues of  our operating  segments (Buildings and
Infrastructure)  as balanced as  possible because this  helps us diversify risks
and provides better opportunities for continuing construction operations in more
challenging  market conditions where the volumes  of one or several sub-segments
substantially decline.
The  Group ended  2020 with revenue  of 296,082 thousand  euros, a  roughly 26%
improvement  on  the  234,071 thousand  euros  generated  in 2019. The Buildings
segment  increased its revenue  by around 34% and  the Infrastructure segment by
around  7%. In 2020, the Buildings and Infrastructure segments generated revenue
of   228,515 thousand   euros   and  67,142 thousand  euros,  respectively.  The
corresponding  figures for 2019 were  170,647 thousand euros and 63,063 thousand
euros.  The current  revenue structure  is also  reflected in  the Group's order
book, where the Buildings segment continues to dominate.

  Operating segments   2020   2019   2018
------------------------------------------
  Buildings             72%    70%    72%

  Infrastructure        28%    30%    28%

Subsegment revenues

In  the  Buildings  segment,  revenue  generated  by  the  commercial  buildings
subsegment  decreased  while  revenue  generated  by other subsegments increased
compared  to  2019. The  largest  subsegment  in  terms  of  revenue  was public
buildings,  which accounted for over a third of total segment revenue and showed
67% year-on-year  revenue growth. During the year, we completed and delivered on
time  the  buildings  of  the  Estonian  Academy  of  Security  Sciences and the
University of Tartu Learning Centre in Narva, phase I of Kindluse Kool - a basic
school  in Järveküla near Tallinn, the  Annelinn upper secondary school in Tartu
and a storage complex for the defence forces' base at Tapa. The largest projects
in  progress in the public buildings subsegment are the construction of a sports
and  health centre  at Kohtla-Järve,  a family  health centre  in Tartu,  and an
extension  to  the  building  of  the  Estonian  Foreign Intelligence Service in
Rahumäe tee in Tallinn, and the reconstruction of two schools in East Ukraine.
A  significant share of  our Estonian apartment  building projects is located in
Tallinn. During the period under review, the largest of them were the design and
construction  of the first two  phases of the Kalaranna  quarter, and the design
and  construction of  the Tiskreoja  residential area  on the  western border of
Tallinn.  A  large  share  of  the  subsegment's  revenue  also  came  from  the
construction of apartment buildings in Sweden.
We  continue to build our own housing  development projects in Tallinn and Tartu
(reported  in  the  apartment  buildings  subsegment).  During  the  period,  we
completed  a five-floor apartment building with 24 apartments at Võidujooksu 8c
in  Tallinn (www.voidujooksu.ee). Revenue  from our own  real estate development
operations  amounted to  2,866 thousand euros  (2019: 6,528 thousand euros). The
uncertainty  of the economic  environment, caused by  the COVID-19 pandemic, has
also affected our development operations. The construction of the Mõisavahe Kodu
(https://moisavahe.ee)  project,  which  started  at  the beginning of the year,
continued  in the autumn after a break of around six months. In carrying out our
own  real estate development  activities, we closely  monitor potential risks in
the housing development market.
The  largest projects of the commercial  buildings subsegment were in Tallinn in
2020. We  completed and delivered on time the  building of Terminal D in the Old
City Harbour, phase I of the Porto Franco commercial and office development next
to  the Admiralty Basin, and  a multi-storey car park  at Sepapaja 1 in Tallinn.
Work continues on a seven-floor commercial building in Rotermann City.
Although  the  amount  and  share  of  revenue  generated  by the industrial and
warehouse  facilities subsegment remained modest  compared to other subsegments,
its  revenue grew  more than  two times  compared to  2019. Still, the  costs of
projects in progress are small, amounting to 2 million euros on average.

  Revenue breakdown in the Buildings segment   2020   2019   2018
------------------------------------------------------------------
  Public buildings                              37%    29%    25%

  Apartment buildings                           28%    27%    25%

  Commercial buildings                          23%    36%    35%

  Industrial and warehouse facilities           12%     8%    15%

Although  the largest revenue contributor in the Infrastructure segment is still
road  construction and maintenance, its proportionate contribution has decreased
year  on year.  A major  share of  its revenue  results from road rehabilitation
contracts of 2 to 3 million euros each. The largest projects in progress include
a  contract secured in 2019 for the construction  of the Kernu bypass as well as
the  Kernu filling station  and Haiba junctions  on the Tallinn-Pärnu-Ikla road,
and  a contract signed this year for the construction of the Väo junction on the
eastern  border of Tallinn. Construction of the latter will continue in 2021. In
addition   to   road   construction   and  maintenance,  the  subsegment  builds
infrastructure  assets for the defence forces  and improves forest roads under a
number  of small contracts  signed with the  State Forest Management Centre. The
Group  also continues  to provide  road maintenance  services in  Järva and Hiiu
counties and the Kose maintenance area in Harju county.
Other  engineering  revenue  is  strongly  influenced  by  the  construction  of
foundations  for 73 wind turbines in the Nysäter wind farm, which is being built
in northern Sweden, near Sundsvall.
A  significant  share  of  specialist  engineering  revenue  resulted  from  the
construction of a 640-metre waterfront promenade at Sillamäe.

 Revenue breakdown in the Infrastructure segment          2020 2019 2018
------------------------------------------------------------------------
 Road construction and maintenance                         74%  78%  89%

 Other engineering                                         21%  18%   7%

 Specialist engineering (including hydraulic engineering)   4%   1%   0%

 Environmental engineering                                  1%   3%   4%

Order book

The Group's order book (backlog of contracts signed but not yet performed) stood
at  215,796 thousand euros at  31 December 2020, a 5% decrease  year on year. In
2020, we  signed new contracts of 236,577 thousand  euros, of which contracts of
55,511 thousand euros in the fourth quarter. The corresponding figures for 2019
were  305,695 thousand euros  and 75,083 thousand  euros. The  Group was equally
successful in winning both public and private contracts.

  As at 31 December          2020      2019      2018
------------------------------------------------------
  Order book (EUR '000)   215,796   227,545   100,352

At   31 December  2020, the  order  books  of  the  Buildings  segment  and  the
Infrastructure  segment  accounted  for  81% and  19% of the Group's total order
book,  respectively (31  December 2019: 85% and  15%, respectively). Compared to
31 December  2019, the order  book of  the Infrastructure  segment has  grown by
around 19% while the order book of the Buildings segment has decreased by around
10% due  to  an  almost  twofold  decline  in  the  order  book of the apartment
buildings subsegment.
The  order book of  the public buildings  subsegment accounts for roughly 40% of
the order book of the Buildings segment. The subsegment's order book is strongly
influenced by the contracts secured in the third quarter for the construction of
phase  III of  the Maarjamõisa  Medical Campus  of the Tartu University Hospital
with  a cost of 47.3 million euros, the construction of an academic building for
an upper secondary school in Kuressaare on the island of Saaremaa and the design
and  construction of  a barracks  for 300 people  in the  defence forces base at
Paldiski.  The order  books of  the commercial  buildings and the industrial and
warehouse  facilities  subsegments  have  remained  at  the same level as at 31
December  2019. A  significant  share  of  the  order book of the industrial and
warehouse facilities subsegment is made up of a contract for the construction of
a  dairy complex for E?Piim in Paide. The order book of the commercial buildings
subsegment  is dominated  by the  construction of  a new  seven-floor commercial
building  in Rotermann City in  Tallinn and a contract  of over 22 million euros
secured  in the fourth quarter for the  construction of the Alma Tomingas office
building  in conformity  with the  requirements of  the LEED Gold certificate at
Sepise  7 in Ülemiste City  in Tallinn. A  major share of  the order book of the
apartment  buildings subsegment  is made  up of  a contract of around 40 million
euros  for the design and construction of  the first two phases of the Kalaranna
quarter  in Tallinn  and the  construction of  the next  phases of the Tiskreoja
residential area on the western border of Tallinn.
The  order book of the road construction and maintenance subsegment accounts for
87% of  the order book of the Infrastructure segment. In the fourth quarter, the
Group  signed  a  contract  of  around  9.5 million euros for the performance of
earthworks  at the Võõbu-Mäo road construction site on the Võõbu-Anna section of
Tartu road and a contract for the reconstruction of the Sillamäe city section of
national  road no. 1 Tallinn-Narva (km 184.7-187.5). The subsegment's order book
is  also strongly influenced by a contract secured in the second quarter for the
construction  of the  Väo junction  on the  eastern border of Tallinn. The Group
continues  to provide road maintenance services in three road maintenance areas:
Järva,  Hiiu and Kose. We  have signed a new  five-year contract for maintaining
national  roads in the Järva maintenance  area. The contract involves year-round
maintenance  of around 950 km  of national roads  in Järva county.  Based on the
rates for 2020, the total cost of the contract is around 10.7 million euros.
Based  on the size of the Group's order  book, including the share of work to be
performed in 2022, and fierce competition in the general contracting market, the
Group's  management  expects  that  in  2021 the  Group's  revenue  will decline
somewhat  compared to  2020. Customers are  increasingly expecting  that general
contractors   should  lower  their  prices  but  the  input  prices  charged  by
subcontractors  have not decreased  as anticipated. This  has put profit margins
under  strong pressure. In an environment  of stiff competition, we have avoided
taking  unjustified risks  whose realisation  in the  contract performance phase
would  have an adverse impact on the Group's  results. Our main focus is on cost
control  and pre-construction  and design  activities where  we can  harness our
professional competitive advantages.

People

Employees and personnel expenses

In  2020, the Group (the parent and the subsidiaries) employed, on average, 708
people,   including  450 engineers  and  technical  personnel  (ETP).  Headcount
increased  by around 3% compared to 2019. The  number of engineers and technical
personnel grew due to a change in the Group's structure: Embach Ehitus OÜ became
a subsidiary, which increased the group's workforce by 43 employees:

Average  number of  employees at  Group entities  (including the  parent and the
subsidiaries):

                  2020   2019   2018
-------------------------------------
  ETP              450    414    419

  Workers          258    273    268

  Total average    708    687    687

The  Group's personnel expenses for  2020, including all taxes, totalled 27,130
thousand  euros.  The  figure  for  2019 was  25,323 thousand  euros.  Personnel
expenses grew by around 7% year on year, mainly in connection with Embach Ehitus
OÜ becoming a subsidiary and the payment of project-based performance bonuses.
The  service fees of the members of the council of Nordecon AS for 2020 amounted
to  165 thousand  euros  and  associated  social  security  charges totalled 54
thousand euros (2019: 187 thousand euros and 62 thousand euros, respectively).
The  service fees of  the members of  the board of  Nordecon AS amounted to 432
thousand  euros  and  associated  social  security charges totalled 143 thousand
euros (2019: 480 thousand euros and 158 thousand euros, respectively).

Labour productivity and labour cost efficiency

We  measure  the  efficiency  of  our  operating  activities using the following
productivity  and  efficiency  indicators,  which  are  based  on  the number of
employees and personnel expenses incurred:

                                                       2020    2019    2018
----------------------------------------------------------------------------
  Nominal labour productivity (rolling), (EUR '000)   422.2   340.6   325.4

  Change against the comparative period, %            24.0%    4.7%    3.3%



  Nominal labour cost efficiency (rolling), (EUR)      10.9     9.2     9.7

  Change against the comparative period, %            17.9%   -5.0%   -3.8%

The  Group's  nominal  labour  productivity  and  nominal labour cost efficiency
improved significantly year on year. The rise is attributable to revenue growth.

Nordecon (www.nordecon.com (http://www.nordecon.com)) is a group of construction
companies  whose core  business is  construction project  management and general
contracting  in the  buildings and  infrastructures segment.  Geographically the
Group  operates in Estonia, Sweden, Finland and Ukraine. The parent of the Group
is  Nordecon  AS,  a  company  registered  and  located in Tallinn, Estonia. The
unaudited  consolidated  revenue  of  the  Group  in 2020 was 296 million euros.
Currently  Nordecon  Group  employs  close  to 710 people. Since 18 May 2006 the
company's  shares have been quoted in the  main list of the NASDAQ Tallinn Stock
Exchange.

Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: [email protected] (mailto:[email protected])
www.nordecon.com (http://www.nordecon.com)